Alliance & Leicester increase minimum payment

Intergalactic_Floozie

Has anyone else had a letter from Alliance & Leicester (MBNA) increasing the minimum payment?

I have £3500 outstanding and the minimum payment is 2.25% or something so I paid £78 last month, but this letter today states:

"You must pay whichever is the least of 5% of the balance, or the balance on the statement if this is less than £10".

So it's going to add nearly an extra £100 to my next payment.

I keep reading the letter over and over again and hoping I have made a mistake, but it doesn't look like it.

Chloe

I've received the same letter from Alliance and Leicester and also from MBNA, both increasing their minimum payment to 5% of the balance shown on the statement. I'm also hoping that I've not read it right but it looks real enough. I'm going to ring their freephone number tomorrow (0800 281 495) and check it out for definite (and try not to panic in the meantime!)

This is going to break a lot of people if it's true.

Dylanwing

More stunning work by the credit card companies. The truth is that they boobed a few years ago in reducing the minimum payment from the norm of 5%, presumably so that customers could 'afford' to carry bigger limits. Now the limits are being taken, the payments go up, all under the banner of 'responsible lending' no doubt. So once again, the Bank messes up, the customers pay!

Dylanwing

Interesting - A&L website still states-

The minimum monthly repayment is the lesser of 2.25% of the balance shown on the statement (min £5)

RayWolfe

Well, if you refuse to face up to the fact that if you pay 2 or 3% you will get deeper and deeper into debt and never pay it off, then you should expect someone else to do it for you.
AND why do you say "the customers pay"? That's the whole point of credit cards, the customer borrows and then pays! How do you think it works?

YorkshireBoy

Dylanwing wrote: »

Interesting - A&L website still states-

It will do, since it hasn't changed yet.

They have to give existing customers x days notification. The website details will change on the date given to the existing customers in the recent mailing.

jonesMUFCforever

Dylanwing wrote: »

More stunning work by the credit card companies. The truth is that they boobed a few years ago in reducing the minimum payment from the norm of 5%, presumably so that customers could 'afford' to carry bigger limits. Now the limits are being taken, the payments go up, all under the banner of 'responsible lending' no doubt. So once again, the Bank messes up, the customers pay!

Interesting view!
Please enlighten me by stating how the banks spent the money?

Dylanwing

Thank you Ejones, always happy to make you chuckle-
In brief. Banks reduce minimum payment. Banks increase credit limits. Individuals make borrowing decisions based on these limits and repayments (Often bad decisions I agree). Individuals budget accordingly. Banks suddenly change rules. Individuals sudenly have to find extra money each Month (Possibly around the same time as mortgage payments go up). Family budgets over-stretched. Consequences??????
In terms of the repayments reducing to as low as 2.25% of balance, that always was a crazy decision, and as I recall, was pretty much condemned in the financial press. It's all very well moralising about posters # 1&2, but the Banks were complicit in creating the problem. To suddenly expect significantly increased payments is not realistic for many family budgets.
RayWolfe - Where is anyone asking for 'someone else to pay off the debt'? And when I say 'The customer pays' - I was alluding to the fact that the Banks make poor decisions (Such as reducing cc payment levels), and when the penny finally drops that this was not a good idea, they just change the rules and as Chloe rightly states-

This is going to break a lot of people if it's true.

And it won't be the Bankers involved in the reckless lending!

Intergalactic_Floozie

I'm not saying I can't afford to pay the extra £100, but I signed up to pay 2.25% not 5% of the repayments! This was actually a balance transfer and the original balance a couple of years ago on another card started off at £8000, and now the balance stands at £3500 so I am quite proud of what I have managed to pay off, thank you very much!

I'm glad I don't have £8k to pay or else my payment would go up from £180 to £400, which would be crippling! However as it's MBNA and they have traditionally lent high limits, there will be some poor sod out there who will have to pay it.

DawnW

It was useful that the OP brought up the issue. It will affect many people, and the post will bring it to the notice of those who may have missed it or not read the small print. Would it be possible / useful for some people to transfer the remaining balance to another card, or even take out a personal loan to pay it off, then cancelling the card? The repayments on a loan might be lower and make budgeting easier.

Dealmad

I hope they dont all do this

Thanks for this useful info ,being only 2.25% was good and easy for people to chose what they want to pay and can afford to pay each month.

Yes well all know if we pay the minimum each month it takes longer to pay off but thats upto the individual....... but i don't thinks its fair that if you signed up for 2.25% then they can just change it when ever they like ....i suppose some would even stick up for banks if they were to rise it to 10% :rolleyes: